The millionaire racing cars and facing down banks

Lawrence Tomlinson says he never expected his report on RBS’s treatment of
SMEs to cause such uproar

Racing car driver, helicopter pilot, waterskier, multi-millionaire: it sounds like someone who spends their time cruising the corniches of the South of France.

It’s actually the profile of a Yorkshire-based businessman who cares so passionately about the fate of small companies in Britain that he risked his reputation to take on one of Britain’s biggest banks.

Lawrence Tomlinson made his fortune setting up a chain of care homes at the age of 23 having had the chutzpah to ask his bank manager for a £526,000 loan to buy his parents’ business.

That was back in 1988, when half a million pounds was a lot of money in business terms.

Since then he’s started a diverse range of businesses under the umbrella of his LNT Group, which employs 2,000 staff, made a significant amount of money and been named the Institute of Directors’ Director of the Year.

In March 2013, wanting to share his flair for starting and growing companies, he became an entrepreneur in residence for the Department for Business, Innovation and Skills (BIS) – something many expected to be a vanity job.

Instead, he made headlines in November when he released an explosive report alleging small businesses were being driven to the wall by the Royal Bank of Scotland, itself the recipient of a multi-billion pound bail-out from the taxpayer.

“I saw the job advertised and, as a serial entrepreneur who’d started up loads of businesses, I wanted to do some good,” says Tomlinson, sitting in the plush boardroom overlooking the factory floor of his empire’s headquarters, off the M1 on an industrial estate in Garforth, just outside Leeds.

“Looking at the state the country was in – I don’t think you could even talk about green shoots – I thought, 'I’ve got lots of experience and I’m happy to share it with civil servants, with government – I can help’.

“I heard there were 100 other applicants but they can’t have been much good because they picked me.”

He gave the £10,000 honorarium to a student for devising a way to boost the local economy and looked at cutting red tape, streamlining planning policy and how to help ministers and civil servants understand the realities that businesses face.

But it was his report on RBS, which claimed that the bank’s global restructuring group (GRG) was pushing struggling yet viable businesses under and then buying up their assets on the cheap, that caused uproar.

He says he never expected it to cause such a stir.

“I was surprised because, if people actually read [the report] rather than just pontificating about it, [they’d see] all I’m saying is, I’ve had all these people contact me and it seems like they have been treated very badly by RBS and GRG.

“All I have done is collated what people are saying about GRG and it’s pretty horrific. I’ve then put them together and said, 'Here’s my report, this is what they are saying. There seems to be a pattern to this because there are so many of them. Somebody needs to investigate’.”

The report’s release spurred RBS to commission the law firm Clifford Chance to investigate GRG.

The lawyers found no evidence that GRG had fraudulently and systematically engineered the collapse of small business customers and the bank said it was considering legal action against Tomlinson, adding that his report contained “the most serious allegations RBS has faced since the crisis and damaged RBS’s brand and undoubtedly harmed the value of the taxpayer’s interest”.

Eight months after the report’s release and two months after the end of his stint as resident entrepreneur at BIS, it’s clear that RBS’s actions - and the banking environment for smaller companies - remain a passion for Tomlinson.

Speaking to The Sunday Telegraph, he’s eager to discuss the recent Treasury select committee session on lending to SMEs, which included evidence from RBS executives Derek Sach and Chris Sullivan. MPs questioned the pair about GRG’s activities.

“It’s great that Clifford Chance cleared [RBS] of fraud but I haven’t accused them of fraud,” he says. “I thought Clifford Chance’s report was surprisingly damning, if you read the detail … it’s not a clean bill of health, it’s 'you really need to look at this’.”

He says he is shocked by Sach’s and Sullivan’s claims that GRG was a “cost centre” for the bank, rather than making money. “I don’t understand. There’s nothing wrong in being a profit centre as long as you deal with people properly.”

His answer is qualified when Tomlinson’s PR adviser steps in to correct a slip of the tongue that saw him initially refer to RBS, rather than GRG. “Well, ha ha ha, there’s an argument there that RBS is a cost centre,” he says, before leaning into the dictaphone to make sure it catches the next remark: “That’s just a little joke there.”

His report contained claims from businesses that RBS forced them into GRG, where they were charged penal rates of interest and high banking fees.

“If you ask RBS, as they were asked [at the select committee], they say they don’t do that. My report gives lots of examples that say to the contrary and [Sullivan and Sachs] were asked to give examples that they weren’t doing this sort of thing,” he says, saying their appearance before MPs “was pretty awful”.

“I don’t really think they came up with a lot of stuff. I’m hoping that what has been reported to me has stopped … although the bank says it never happened.”

Although this 49-year-old entrepreneur in orange and black Nike trainers, faded jeans and a polo shirt advertising his Ginetta racing car group might seem to detest banks, he protests that he doesn’t.

Commenting that “in the current banking market” a young entrepreneur would have “absolutely no chance whatsoever” of getting a loan similar to the one that kick-started Tomlinson’s empire, he says: “The sad thing about it is without [that £526,000 loan] the bank wouldn’t have made millions and millions of pounds out of me. And I am happy, absolutely delighted, about that.”

He says: “I am not anti- banks at all, I am anti-bad banking practice and anti a banking marketplace where there is no competitiveness for the banks – but everyone has to make some money somewhere along the line, so what’s in it for me, what’s in it for the banks?

“So, if I am making £30m and the bank’s making £1m off it and the bank gave me the ability to make that money, why am I bothered about that?

“If they gave me the ability to do that I’d be delighted to write a cheque to them for £1m, it’d be fantastic.”

Tomlinson’s solution to improving the banking market is to break up RBS and fellow bailed-out bank Lloyds into six brands, each with 10pc of the retail and commercial banking market place.

This, he says, would force them to introduce products that customers, not bankers, want – “A customer did not suddenly think, 'You know what I can’t live without this week? An interest rate swap product’.” – creating a network similar to how it was two decades ago, when lenders were fighting for customers’ business.

He does not feel most business customers need complex products such as rate swaps. “They’re an example of an investment bank pushing down a product that contaminates a perfectly good commercial and retail bank like NatWest,” he says. “Those products were designed to make banks make money.”

A suggestion that rate swaps were designed to protect customers if interest rates rise is dismissed. “Just like PPI, another useful product,” he says.

But despite seemingly wanting to recreate the past, Tomlinson is no Luddite.

“I’m not old-fashioned and only love old things,” he says. “I’m just trying to create a banking system that looks like something the business community would want, not something the financial industry is forcing on businesses.

The report has taken a toll. “It’s been incredibly disturbing for me personally, sitting down and interviewing people for this report,” he says. “Speaking to people who have lost everything, families broken up, people have killed themselves, were going to kill themselves, it’s been horrendous … that’s what drives me on.”

He says it would have been easy to ignore the issues highlighted in his report. “I could have gone, 'God, that’s terrible. Oh well, better get back to work’.” In fact, it would have been easier if he had walked away – RBS has been his group’s main bankers for 20 years.

Taking up his idea of forcing the banks to compete again is key to driving the economy forward. Tomlinson says the long-term funding market for businesses is currently dead, with banks unwilling to lend, meaning would-be entrepreneurs can’t start out and going concerns can’t grow.

“We need a banking system that encourages people to borrow and take a risk and move on,” he says. “What the UK needs is businesses that grow and keep growing rather than have to sell out because they reach a stage where they don’t want to take any risk any more because they don’t trust the banks.”

He took a risk by buying the ailing Ginetta sports car business in 2005. While the business with its signature orange cars makes an operating profit, it is loss-making because Tomlinson is ploughing the money back into R&D to make sure it’s a future success.

“Everything we do, everything we make, everything we build and sell we make money on,” he says, recalling how he bought the business as his racing team was in the middle of a campaign that eventually saw it triumph at Le Mans.

“People thought, 'My God, what’s the boss gone and bought that for, he’s gone nuts. They make these crappy little sports cars and we want to be associated with fancy GT2 cars.’ Then we came out with a new road car right at the start of the recession …”

While the financial crisis was at its height, Ginetta took another risk when Tomlinson said he wasn’t happy with the safety of the design he had inherited in the Junior type car and redesigned it.

“To go to people in the end of the 2009 season, in the absolute depths of the recession, and tell them their cars were redundant and they needed to spend £30,000 on a new one, that was a ballsy move.”

It is this willingness to take risks that has helped to make Ginetta the car to beat.

The businesses in Tomlinson’s LNT are reported to have made him a half-billion pound fortune, a figure he’s unwilling to confirm: “[The media] do their own calculations; I wish I could write a cheque that big.”

He does admit to being “pretty well set up”, so perhaps it’s easier to talk about risk with that sort of financial firepower behind you. But maybe a tale from Tomlinson’s driving career does a better job of illustrating his attitude towards risk.

Describing the process that led to him crashing at Brands Hatch recently, he says: “I was following a car through a corner at 111mph and I tried at 125mph, which is just impossible, but I’ll try until I crash.”